Free IIA IIA-CIA-Part1 Practice Questions 2026 - Page 27

For a new board chair who has not previously served on the organization's board, which of the following steps should first be undertaken to ensure effective leadership to the board?

A. Chair should learn the current organizational culture of the company.

B. Chair should learn the current risk management system of the company.

C. Chair should determine the appropriateness of the current strategic risks.

D. Chair should gain an understanding of the needs of key stakeholders.

A business unit manager was impressed by the competence of the internal auditor who was conducting an assurance engagement in his area and the manager made the auditor an attractive job offer to begin after the audit was completed The auditor later told her auditor in charge that she was considering the offer. Which of the following IIA Code of Ethics principles was most likely violated?

A. Integrity

B. Confidentiality

C. Objectivity

D. No violation was committed

Which of the following is the best example of a risk appetite statement concerning an investment portfolio?

A. We will request CEO approval for investments greater than S20 million and board approval for investments greater than $50 million.

B. We will hedge 95 percent of our U S. currency exposure and 100 percent of our European currency exposure.

C. We have a moderate tolerance for investment earnings volatility with a target value at risk of S50 million.

D. We will report to the risk committee all credit losses greater than S10 million and all market value losses greater than S20 million.

Outsourcing a business activity is considered which of the following risk management techniques?

A. Sharing a risk.

B. Avoiding a risk.

C. Reducing a risk.

D. Mitigating a risk

An internal auditor assigned to a supplier management process engagement reviews the risk assessment with the process owner The auditor inquires about the risk response for potentially engaging unqualified third-party service providers The process owner responds that due diligence checks are undertaken to make sure that third parties possess requisite competencies before they are engaged Which of the following risk management techniques is the process owner using?

A. Risk avoidance

B. Risk reduction

C. Risk sharing

D. Risk acceptance

Which of the following actions would an internal auditor perform primarily during a consulting engagement of a debt collections process?

A. Reviewing journal entries for accuracy and completeness.

B. Comparing the policies and procedures to regulatory collections guidance.

C. Advising management on streamlining the recording of accounts receivable.

D. Performing a walk-through of the debt collections process to determine whether proper segregation of duties exists

An internal auditor is performing testing to gather evidence regarding an organization’s inventory account balance and is mindful of the possibility that the sample used might support the conclusion that the recorded account balance is not materially misstated when, in fact, it is. The auditor's concern best describes which of the following risks?

A. incorrect rejection risk

B. Incorrect acceptance risk.

C. Tolerable misstatement risk.

D. Anticipated misstatement risk

Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?

A. An independent third party has assessed the organization's system of internal controls to be adequate and effective,

B. The chief audit executive reports both functionally and administratively to the CEO.

C. The internal audit charter is drafted properly and approved by the appropriate parties.

D. The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives.

Considering the concepts of organization wide risk management and the system of internal controls, the internal audit activity as a whole can be considered which of the following types of control?

A. Transaction-level control.

B. Management-oversight control.

C. Governance control.

D. Process-level control.

Which of the following most accurately describes the role of the board when it comes to organizational governance?

A. Responsibility for outcome of the process.

B. Responsibility to be involved in management of the organization.

C. Responsibility to determine who is accountable for outcomes.

D. Responsibility to identify risks in the organization’s business environment